Anatomy of a Blank Check IPO by a Hedge Fund Manager

Marc Lasry and Sonia E. Gardner, founders of private fund manager Avenue Capital Management (Avenue), are seeking to raise $175 million of new capital through a “blank check” initial public offering.  They have formed a new entity, Boulevard Acquisition Sponsor, LLC (Sponsor), to serve as sponsor of the offering.  The shares will be offered by Boulevard Acquisition Corp. (BAC), a corporation whose initial shareholders are Sponsor and three proposed independent directors of BAC.  Avenue portfolio manager Stephen S. Trevor is BAC’s President and CEO.  BAC’s recently-filed amended Registration Statement on Form S-1 provides a helpful example of the workings of a blank check offering by an established manager.  As is the case with all public offerings, SEC rules require the registration statement for a blank check IPO to contain a great deal of information about the offering and its sponsors.  This article focuses on the logistics and unique characteristics of a blank check IPO, the economic terms of the offering and risks facing potential investors.  Hedge fund managers have used or attempted to use public offerings for a number of business purposes, including to monetize the value of a hedge fund management business (see “Mechanics of a Hedge Fund Manager IPO,” Hedge Fund Law Report, Vol. 5, No. 16 (Apr. 19, 2012)), and to raise funds to acquire mortgage backed securities (see “Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle,” Hedge Fund Law Report, Vol. 2, No. 50 (Dec. 17, 2009)).

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